Applera Corp. v. Michigan Diagnostics, LLC
| Decision Date | 27 January 2009 |
| Docket Number | No. 07-CV-10547-GAO.,07-CV-10547-GAO. |
| Citation | 594 F.Supp.2d 150 |
| Parties | APPLERA CORPORATION, Plaintiff v. MICHIGAN DIAGNOSTICS, LLC, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
O'TOOLE, District Judge.
The plaintiff, Applera Corporation, acting through its division Applied Biosystems Group ("Applied Biosystems"), alleges in its amended complaint that the defendant, Michigan Diagnostics, LLC ("Michigan Diagnostics") has infringed three of its patents: U.S. Patent No. 6,514,717B2 (the '717 Patent), U.S. Patent No. 6,322,727B1 (the '727 Patent), and U.S. Patent No. 6,107,024 (the '024 Patent). These patents relate to kits used for detecting a substance in a sample through the generation of light (chemiluminescence) by activating and decomposing stabilized 1,2-dioxetanes. Applied Biosystems alleges that Michigan Diagnostics has directly and indirectly infringed these patents in violation of 35 U.S.C. § 271(a)-(c).
All three of these patents have apparently expired for various reasons. In its original complaint, Applied Biosystems acknowledged that the '717 Patent had expired, but alleged past infringement of that patent and ongoing infringement of the '727 Patent. After being informed by Michigan Diagnostics that the '727 Patent had expired, Applied Biosystems amended its complaint to allege only past infringement of that patent. It also added a claim for infringement of the '024 Patent, which has similarly turned out to have expired.
Applied Biosystems now seeks leave to file a second amended complaint which would modify its allegations as to the '024 Patent in light of its expiration, allege infringement by Michigan Diagnostics of five additional patents, and add a new defendant, Dr. Benjamin Giri, the cofounder and co-owner of Michigan Diagnostics. Michigan Diagnostics opposes the motion to amend.
In response to the existing complaint, Michigan Diagnostics has asserted counterclaims against Applied Biosystems. Invoking the Declaratory Judgment Act, 28 U.S.C. § 2201 ("DJA"), it seeks a declaration of non-infringement as to sixty-two Applied Biosystems patents. It also counterclaims for patent misuse, unfair competition under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and Walker Process fraud in violation of the Sherman Act, 15 U.S.C. § 2. See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965). Applied Biosystems has moved to dismiss these counterclaims.
Because it will aid the analysis of the counterclaims to know whether additional infringement claims are part of the case, I turn first to whether Applied Biosystems should be granted leave to amend its complaint.
As noted, Applied Biosystems proposes to amend its complaint to add infringement claims as to five new patents and to add Dr. Giri as a defendant. Its proposed second amended complaint alleges that Dr. Giri is personally liable for direct and indirect patent infringement, having been personally and actively involved in the infringing activities and in activities that he knew would induce others to infringe. It also contains veil-piercing allegations that Dr. Giri is liable for Michigan Diagnostics' infringement because it is a sham company and alter ego of Dr. Giri.
Leave to amend a complaint should be given freely "when justice so requires." Fed.R.Civ.P. 15(a)(2). This standard reflects the liberal amendment policy underlying Rule 15. O'Connell v. Hyatt Hotels of P.R., 357 F.3d 152, 154 (1st Cir.2004). "Grounds for denial generally involve undue delay, bad faith, dilatory motive of the requesting party, repeated failure to cure deficiencies, and futility of amendment." U.S. ex. rel. Rost v. Pfizer, 507 F.3d 720, 733-34 (1st Cir.2007) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)).
Michigan Diagnostics argues that Applied Biosystems has not provided a sufficient reason why it should be allowed to amend its complaint a second time. It particularly argues that Applied Biosystems has not proffered any exhibits that provide a basis in fact for its new infringement allegations or for its allegations against Dr. Giri. It faults Applied Biosystems for having "made no effort to determine the veracity of its accusations in the Second Amended Complaint" by, for example, deposing Dr. Giri. (Def. Michigan Diagnostics' Resp. to Applera Corp.'s Mot. for Leave to File Second Am. Compl. 9.) This argument puts the cart before the horse. Applied Biosystems need not prove its claims before making them, and to the extent this argument is directed at the futility of amendment it falls far short of the mark.
Michigan Diagnostics also contests Applied Biosystems' allegation that Dr. Giri "has been responsible for all of Michigan Diagnostics' research and development activities since its founding," (Pl. Applera Corp.'s Mem. in Supp. of its Mot. for Leave to File Second Amended Compl., Ex. A, pt. 1, ¶ 4), and suggests that this is false because "Dr. Giri has been listed as a co-inventor on at least one of Michigan Diagnostics' published patent applications." (Def. Michigan Diagnostics' Resp. to Applera Corp.'s Mot. for Leave to File Second Am. Compl. 9.) This modest nonsequitur would be relevant, if at all, to the merits of Applied Biosystems' allegations, but such a dispute of fact does not counsel against granting Applied Biosystems leave to amend.
Michigan Diagnostics further states that Applied Biosystems' request for leave to amend is made in bad faith. Its argument in this respect is based principally on Applied Biosystems having twice alleged the ongoing infringement of patents that were actually expired. This latter observation point is fair enough, but there is no suggestion—or better yet, information—that any of the new infringement allegations repeat the problem.
The argument that the new claims are made in bad faith is that Applied Biosystems is asserting successive claims on new patents in order to draw out litigation. This same assertion is employed in support of the contention that Applied Biosystems has a dilatory motive and that amending the complaint will cause undue delay. However, the motion to amend is within the Court-approved schedule established on the basis of the parties' joint proposal and prior to the close of discovery and any summary judgment motions. Michigan Diagnostics has already counterclaimed seeking a declaration of non-infringement as to sixty-two Applied Biosystems patents, including four of the five new patents sued on in Applied Biosystems' proposed second amended complaint. Any "delay" occasioned by the need to address the new claims is not undue.
Accordingly, Applied Biosystems' motion is granted and it may file its second amended complaint as proposed.
Applied Biosystems has moved to dismiss Michigan Diagnostics' counterclaims. It argues that Michigan Diagnostics' counterclaim seeking a declaration of non-infringement fails to present a case or controversy and therefore must be dismissed pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction. It further contends that Michigan Diagnostics' counterclaims for patent misuse, unfair competition, and Walker Process fraud each fail to state a claim upon which relief can be granted and must be dismissed pursuant to Rule 12(b)(6).
In the first of its counterclaims, Michigan Diagnostics seeks a declaration of non-infringement as to sixty-two Applied Biosystems patents. With the filing of the second amended complaint, Applied Biosystems alleges the infringement of seven of these sixty-two patents. The other fifty-five are simply other patents held by Applied Biosystems. Applied Biosystems argues that this Court lacks subject matter jurisdiction over Michigan Diagnostics' counterclaims for a declaration of noninfringement of these additional patents because no justiciable case or controversy exists as to those fifty-five patents. I agree.
The DJA provides that "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The requirement that there be a has been interpreted to refer "to the type of `Cases' and `Controversies' that are justiciable under Article III." See Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (citing Aetna Life Ins. of Hartford, Ct. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 81 L.Ed. 617 (1937)).
Until recently, the Federal Circuit1 employed a two-part test to determine the existence of a sufficient "case or controversy": (1) whether conduct by the patentee creates a reasonable apprehension on the part of the declaratory judgment plaintiff that it will face an infringement suit; and (2) whether conduct by the declaratory judgment plaintiff potentially constitutes infringing activity or demonstrates concrete steps taken with the intent to conduct such activity. SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1379 (Fed.Cir.2007); see e.g., Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (1988).
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